Sony’s Moment of Truth

This evening, Sony will unveil its PlayStation 4. The leaked photos, rumors, and prognostications make it sound pretty darn exciting. But the company needs more than that, because this is the precise moment at which Sony traditionally fails.

Sony used to be bigger than Samsung, and it used to be bigger than Apple. It also made really cool stuff. Check out the Pinterest page for Retro Sony Products. If you were born before 1990, you’ll surely get something of a buzz. The Trinitron was very, very cool.

Today, measured in market capitalization, Sony is about one-fifteenth the size of its rival in Seoul and close to one-thirtieth the size of its rival in Cupertino. It hasn’t made money in five years. This isn’t just a bad thing for one company; it’s a bad thing for a country. Sony was founded in the rubble of Tokyo after the Second World War, and its fortunes have mirrored Japan’s. Sony caused a cultural panic when it bought Columbia Pictures, in 1989. Apple made almost enough profit last quarter to buy Sony.

What happened? Part of the problem was cultural; for a long time, Sony had too many teams creating too many things. The company also kept putting its money on crippled horses. “3-D will sweep the world,” Howard Stringer, its previous C.E.O., said less than three years ago. And Sony holds onto products, and proprietary systems, for too long. The Walkman was awesome. And it should have been the iPod. Instead, it became the MiniDisc. By the time Sony won its fight to make Blu-ray a standard, physical discs were becoming obsolete.

Now, gaming consoles are in trouble, too. A million Angry Birds have crashed into them; Farmville Farmers have dug up the grass around them. The Sony PlayStation 2 sold about a hundred and fifty million copies. The PlayStation 3 sold roughly half that. According to the NPD Group, as cited in the Wall Street Journal, sales of consoles, accessories, and games have declined in every month for more than a year. There were nearly three smartphones sold last year for every console of the current generation ever sold.

So what does Sony need to do? The company’s fortunes, and margins, have improved slightly in recent months, partly owing to a weaker yen. Now, they need to transform the PlayStation franchise into something new. What we see tonight needs to be more than just a better version of something old. It needs to help us reimagine how we use gaming consoles and how we play games. Otherwise, the PS4 is going to end up as a cool little image on a retro Pinterest page.